An overview of the social enterprise
sector
L
Upkar Pardesi
What is a Social Enterprise?
• A social enterprise is a business with primarily social objectives whose
surpluses are principally reinvested for that purpose in the business or in
the community, rather than being driven by the need to maximise profit
for shareholders and owners. The Department for Trade and Industry
• Trade for social and/or environmental purposes
• Generate at least 50% of their income from trading activity (i.e. selling
goods or services)
• Largely reinvest their profits back into the business to achieve their social
or environmental goals
• Have governance and legal structures that enable staff, members,
representatives from the local community, or other stakeholders to own
and run the business.
• Well known examples include The Big Issue, Divine Chocolate and Jamie
Oliver’s restaurant chain Fifteen.
Types of Social Enterprises
Many different types of venture meet SE criteria including:
• Worker cooperatives – that provide employment for their members
• Consumer cooperatives that provide goods and services for members
• Community Businesses – supplying goods and services that meet the needs
of a particular local community.
• Development Trusts and other community-based regeneration groups
• The trading arms of charities
• Social Firms – small businesses providing integrated employment and training
mainly for people with disabilities
• Credit Unions – supplying low cost savings and loans to specific communities
• Community Development Finance Institutions providing access to finance for
Types of Legal Entities
Many different forms of legal entity:
• Usually companies limited by guarantee
• Registered charities
• Industrial and provident societies.
• Now include Community Interest Companies
(CIC)
Statistics on VCOs and Social
Enterprises
Statistics on VCOs and Social Enterprises:
• 22,000 faith based organisations
• 11,400 working with women
• 11,700 working with BME Groups
• 37,000 working with people with disabilities
• 200 working with LGBT Groups
• 2005-2007 data from the Annual Survey of Small Business UK:
– 5% of all businesses
– 62,000 Social Enterprises
– Contribution £24b to the economy
– Employing 800,000
Baseline survey in September 2007 Found
• Social enterprises in Birmingham & Solihull employ almost
12,500 staff.
• The main service activities provided by social enterprises are:
• Training 55%
• Counseling /advice services 51%
• Education & research 43%
• Services for people with disabilities 41%
• Health and social care 37%
• Youth services 37%
Statistics on VCOs and Social
Enterprises
Statistics on failure rates of small firms including Third
Sector Organisations
• One Third of all start-ups fail in the
1st year.
• Two Thirds fail within three years.
Statistics on VCOs and Social
Enterprises
Statistics on recent deregistration of Charities:
• Year end Aug 2010: 3,262*
• Year end Aug 2009: 2392
• Year end Aug 2008: 1,630
*Charities with turnover of >£5,000
Source: Charities Commission
Sustainability: Reasons Why So Many
Charities and VCOs Fail?
• Service or Funding Lead: No real knowledge of
what the community needs or wants.
• “ME TOO” or “COPY CAT” For same or similar
communities and causes – Little or no
differentiation. (we want one too!!)
• Little or no business planning or skills for long
term planning. No business development/fund
raising skills – rely on consultants to prepare bids.
• Become heavily reliant on funding and handouts
– no real marketing and business development
skills to build sustainability.
Sustainability: Reasons Why So Many
Charities and VCOs Fail?
• Lack of leadership and good governance from the
Board. Active volunteers become Trustees – not
because of their skills and independent views and
judgement. Lack of representation of young and
women.
• Lack of strong leadership and management skills in the
team. Volunteers take up senior officer/CEO/Director
role(s)
• Closed shop – volunteers get paid jobs without having
the right skills.
• Undercapitalised – lack of investment. No real business
model.
Why faith inspired Social Enterprises
Fail?
• Many BME faith organisations are dominated by older men who
may or may not be fluent in English.
• Many become Trustees because they are founders of the places of
worship/community organisations.
• Many continue to employ “priests” and other faith
leaders/specialists from overseas and therefore not able to fully
engage with British born young people and women.
• Many places of worship also create faith inspired community
centres, voluntary associations and associated charities that are
governed by Trustees selected from congregations – but again tend
to be dominated by older men who are not fluent in English
language, culture and wider society.
• CEO/MD/Senior Officers tend to be appointed from within the
same faith community – tend to be men and not always with high
level skills of leadership/management
Development of Sustainable Social
Enterprises
Success Criteria:
• Strong Board with diverse skills set and knowledge of good
Governance and led by committed and well connected Chair.
• Access to potential new Trustees/Non-Executive Directors.
• Strong CEO/MD/Senior Executive Director with strong leadership
skills.
• Small team of capable functional managers.
• Medium to long-term strategic plan and planning processes in
place.
• Marketing orientation and a diverse income/customer base:
Marketing and fund raising capability is in place.
• Access to investment funding.
• Well developed partnerships in place.
Government Position on SE Sector
Growing the Social Investment Market: A vision and strategy Feb 2011
Government Position on SE Sector
Growing the Social Investment Market: A vision and
strategy Feb 2011
Government Position on SE Sector
Growing the Social Investment Market: A vision and strategy Feb
2011
Opportunities
• Proposed creation of The Big Society Bank
• Emergence of Local Enterprise Partnerships (LEPs) with the
£1.4b Regional Growth Fund.
• The fund will provide focused investment for projects that
offer significant potential for private sector-led economic
growth and sustainable employment.
• Government includes social enterprise within its definition of
‘private sector’.
• Biggest opportunities are in the Health, social care, education,
training and youth sectors.
Funding Opportunities
–
• SEIF Capital Growth Fund For SEs to help them to deliver innovative
health and social care services, enable them to grow, and become more
sustainable. Open till March 2012. Grants and loans from £50K to £150K.
• Social Action Fund
– Social action in the community – projects that will encourage people to come together
in their neighbourhoods to support each other.
– Social action inspired by the Olympics and Paralympics
– Social action for all ages – projects that motivate people across all generations to get
involved in volunteering and charitable giving- For scaling up a successful project – From
£500K to £1m
• The Capital Adventure Fund – for community enterprises
• Community Builder Fund – Look for the 6 best projects
The minimum investment is £250,000 and the maximum is £750,000.
Closing date 9 December 2011